the market, if we don't start the wean, they don't take that as a good sign. >> you just coined the new slogan, the market wean. >> the market wean. >> yeah, because i think the underlying message if it's delays that the economy is weakening. >> all right. >> good news is good news. bad news is bad news. join us tomorrow. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with kelly evans from the new york stock exchange. cramer and faber are still off. at post nine today, strategist with ipq capital iq. sam, it's good to have you this morning. futures are up despite worrisome signals. a lot more retail is coming out with warnings about the quarter. we're going to talk about that in a moment. in asia, the nikkei was down but china's trade data did beat

expectations even though some people don't trust the numbers over there. europe has been slightly higher for most of the morning. in our road map today a tale of two consumers told through the registers of mcdonald's, the electronics department with costco where profits are losing some power. >> groupon has a new deal for investors as eric takes over sole ceo and the buyback is the first order of business. surprise quarterly profit leaves tesla's ceo laughing at potential rival bmw's entry into the electric car market. t-mobile dialing up the biggest customer growth in four years. ceo john ledger will join us live in a little bit. but first up as we said, futures are higher today. markets had a crazy couple of weeks here as we've been up six weeks now. sam, we're trying to avoid our -- we're on pace for our -- worst week in seven. and then today, here's the mom and pop paper, usa o"usa today" the 1700 club, all the

strategists on the street who has targets at 1700 and above. tom lee just on "squawk" has a picture here on the paper. is that the club you want to be? >> that's a club we're in and i think we're on the right side of the ledger by being in the 1700 club. i remind you that "usa today" had strategists in january of 2012 saying it's time to get into stocks and we certainly had a good run last year. so, you know, i think what it basically says is don't be wrong for too long. you have to acknowledge that prices lead fundamentals and slowly the fundamentals are catching up to the pricing. >> you've had some really good directional calls this year. there was a period though a couple of months ago where you said get ready for some choppiness. what did you say and what has happened since? >> what we did say at the time is that we thought we would see a pull back of anywhere from 8 to 10%. we changed our call in early june because we felt that while we would still get a pullback we thought it would be closer to the 5% rather than the 10% zone

of what we define as a pullback. we obviously didn't catch the bottom which was june 24th. now our feeling is that we're probably going to break back above the 1700 level and maybe top in the 1750 plus area. >> although that feels now that so many people have chased that market and raised their price target as the rally has continued. it's interesting for them to talk about the 1700 club growing when we've already been at 1700. this is not on out of consensus -- >> issue is holding it, right, sam? a lot of them, this week saying, sam, saying, we've got to shop around here. maybe the 1740 by year end. but not a lot of directional upside. >> right. i mean, seasonally we're in a weak period for the market. july is the slowest month in terms of volume. august is better. august on a price basis is the third worst month of the year. we've already had our pullback in the year in my opinion. but -- or i should say pullback for the may through september period. i would tend to think that we

probably could end up seeing some more price weakness once we get to that 1750 plus level, maybe september, october, november time frame. >> interesting. it's going to have to happen in the face of guidance from retailers. mcdonald's, news involving the consumer at least on the front burner today. mcdonald's posting global same-store sales up 0.7% for july. above consensus. results led by bigger than increase in u.s. comp like the big mac, chicken mcnuggets and same-store sales today, costco, whose comp sales for july up 4%. that did miss consensus estimates. worries about weakness in electronics over there. but aeropostale echoing what eagle said. ralph lauren was tough this week. >> it seems like there hasn't been a consistent theme. a couple of notes this morning, perhaps starting to stitch the picture together. jpmorgan upgrading lows while at

the same time downgrading target. they're saying the purchasing power people have for their homes, the amount they're shipping to spending on homes, maybe fixing them up or aren'ting or whatever is taking away from what they're spending elsewhere. this isn't the environment like 2004, '5, '6, refinance your home and actually increase your muching power. if anything, people are putting money into that refinancing. >> downgrade at target today is a good read. cut it to neutral. it's 3% below our target price target. that's what's valuation call. they're also saying pressure at the low end. the payroll tax increase is offsetting whatever wage growth people are managing to cobble together. >> it's also interesting because we're heading into at least a worry of a tightening interest rate environment. maybe not directly tightening but when you taper, that's the same as taking your foot off the gas. and in 1994 and that five-month period when the markets slipped, after the first rate increase,

the home improvement retailers were the best performing group up about 30% whereas the homebuilders and the direct consumer items were the biggest ones being hit. mainly because you're not going to buy a new home or you're going to slow on that but you're going to fix up the one you've got. >> just to round this out as well before we get to groupon in a second, when it comes to citi looking at the back to school trends, they're saying weakness. this isn't just a story of one area or another. that, in fact, their favorite play for back to school is walmart because, again, low income consumer under pressure. all the themes are coming to the forum as we move through the year, realize that while the market is okay, it's not good enough to offset some that we saw. >> that will be a story all day long, retailers. >> yeah. groupon is surging in the premarket. the daily deals website reporting better than expected second quarter sales. here to give us his insight into groupon is aaron kessler, senior vice president for equity

research at raymond james. good morning. >> thank you for having me. >> look, for of all, what do you make of the naming of eric love's comp as the sole ceo here? >> yeah, right now it's right decision. i think they've shown some progress the last two or three quarters here. i think they're on the right track. why disrupt that now? i think they have the right pieces in place. they've seen a turn around in the u.s. business the last couple of quarters. international is the next to come. i think they're making the right steps at this point. i think it's a justified move by groupon. >> we're look at a 25% increase premarket. i thought coming into the report the shares were up 80% year to date. understandably after they had gotten beaten down, still only trading at $10.90 a share. what are they doing here, aaron? is it a mobile story, the tweets they made with the way people can use their coupons for a longer period of time? >> they're moving away from the e-mail model. e-mail is now 40% of the

transactions on the site. moving more towards that mobile as well as deal bank. deal bank is the pool plod delta consumer is going to the groupon website. maybe you find a groupon coupon through search. but less likely to just be finding it through e-mail. i think that's a positive change for the model. 50,000 deals in the deal bank. that's versus 1,000 deals, live deals at the time they went public. >> you know what's so interesting though is this is also -- how many times do we hear about how low barriers to entry in this space and all of these people following their lead and the market was getting oversaturated. has that changed or is there a way in which groupon is able to set itself apart in this coupon area? >> yes, i would say low barriers to entry but high barriers to scale and groupon is a survivor. i think you've seen a lot of smaller players get out of the market which is positive for the players remaining. >> aaron, i notice today it's been pointed out that their market cap looks to open about $6 billion. that would put them back to the

price that google wanted to pay for them so long ago. was saying no to that deal still the smart thing? >> yes. i think they have a massive opportunity for the longer term. hard to judge companies in the very short-term nature. yeah, longer term they're going after mass, commerce market and massive local market. longer term if they can nail this local piece, it's a big opportunity. $6 billion won't look like much in the very long term. >> all right. aaron, thanks very much for your thoughts. we will keep an eye on those shares and see if they can hold that 25% gain we're seeing premarket. later on in the market as well, we'll have a live interview with groupon's ceo, eric lefkofski. tweet us at "squawk on the street." use the #askgroupon and your question could make it to air. tesla excluding items, the carmaker swung to a surprise second quarter profit. elan musk says he is confident with a 25% gross profit for the quarter. last night, he was asked what he

thinks about bmw's electric car. the i-3. >> well, i'm glad bmw is bringing an electric car to market. that's cool. but i think that it's -- there's room to improve and i hope they do. my comments about -- sorry. yeah. anyway. >> yeah. good times. good times. apparently elon thought that was hilarious, the notion that bmw has room to improve. >> yeah. what was he laughing at? laughing at the idea -- >> he says they have -- they could improve. i hope they do. ha-ha-ha. competitive juice. >> skeptical laugh, in other words, that they could do it? >> i woulds a soon as one of their chief rivals in this space, he is, yeah, skeptical.

>> laughing them off. >> yeah. >> i would think so. you can't laugh off the stock. it's triple this year. this was a $30 stock in march. just keep that in mind. it's going to open up almost 15% today. market cap does go to 18 billion, sam. some people look at tesla saying, what. it's the quarter, the market cap of general motors. that's a cult stock. it's been called a cult stock many times. >> we don't follow the stock an litically. from our per spiktive we look at it as what is it saying for the automobile industry in general. and the direction of automobile going away from the fossil fuel, et cetera. so i think people look upon it in many cases as sort of a sentimental favorite. if we can get the electric car to be successful, then maybe there's hope for the volt, maybe there's hope for bmw's version, et cetera, and we could see expansion of charging stations. >> we should just mention this. remember when we unveiled the bmw electric vehicle, carl. phil did it. behad one outside cnbc

headquarters. a lot of people didn't like the look of it. bmw wasn't too happy with that. all right. give it time. let people get used to it. that may have something to do with the specific vehicle. >> and a much different price point. i-3 is a $40,000 car. tesla is $100,000. different customers. when we return, a bigger than expected surge in subscr e subscrib subscribers. t-mobile u.s. upping the ante. one more look at futures as stocks try to avoid their first four-day losing streak of the year. and at this point, looks like we might do it at the open. we're back in a minute. [ male announcer ] come to the lexus

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t-mobile u.s. traded higher after reporting the largest customer growth in four years. the fourth largest american carrier did post a loss of $16 million for the quarter. revenue rose from last year. here first on cnbc john ledger, t-mobile u.s. president and ceo.

it's good to have you back. welcome. >> wow, glad to be here, carl. i was up late watching "the twitter revolution." >> i'm glad you caught it last night. we had a good time online walking people through it. let's talk about your quarter, man. $1.1 million. that is a lot of new customers. is this iphone, is it the new phone plans, is it increased aggressiveness on marketing. what accounts for it? >> carl, it's the uncarrier revolution. it's what i've been talking about the whole time. underneath that 1.1 million net ads. we were 688,000 post-paid net ad. 685,000 of which were phones, which by the way, made us number one in the whole industry in q2, ahead of verizon at&t and sprint and chrks rurn on the post side low for us.

we had 4.3 million units sold, up from 2.2 million even when you normalize for metro pcs it was 4.5. 77% year over year increase in gross ads. what's happening is the -- >> and john? >> yes. >> given those metrics which are quite strong, a lot of people want to know is it the fact that you started to discontinue two-year subscriptions. back in march that is driving this increase and customers coming and signing up with t-mobile. >> yeah. what -- we did a couple of things. simplified pricing which people were annoyed by. one of the biggest paying points. no cracks. low up front device costs. then we came in with any time upgrade. and just to point out, we did launch the iphone. but here's the interesting statistic. i want to debunk some of the myths. what's happened here is of all devices that we sold to upgrades and ads, 29% were iphones. if you just look at the gross

ads that took place, only 20% were iphones. this wasn't just a one-time iphone item. most importantly, try this one out -- we gave new guidance. we said the year is going to be 1 to 1.2 million post paid net ads. let me tell you what that's an update from. previously what i skad is that we may have some incremental net ads sometime in '13, we go positive in '14 and people looked at me like i was totally nuts. how are you possibly going to do that? we upgraded our view that says the second half we will actually add more than the first half. so t-mobile is really struck a cord on the uncarrier proposal to customers and on carrier phase three is coming right around the corner. >> do you think, john, it's your somewhat aggressive, feisty ad campaign this is what's helping you win customers from other plans? i mean, or is it fatigue with some of the other carriers? is it simply that the consumer which we've been talking about this morning, in fact, under

pressure and a lot of different segments is just looking for the cheapest options out there right now? >> it's not just the cheapest options. i've said many times since i got here -- and by the way, not just our ads are aggressive or the ceo is aggressive. i've got 47,000 very aggressive, excited employees that are taking it to the customers, that are taking it to the competition. but the customers are completely unsatisfied with the other carriers. the way they are sold to. and by the way, the network experience. we have rolled out a smoking fast lt network that now approaches update from even in july, 167 million, 2 x 10 megahertz, up to 220. i think it's a different proposition. it's a different focus on the customers. and it's a very unsatisfied customer, especially -- you know i couldn't go a whole interview about tell you where these

customers are coming from. it's a company that has a "t" but not this "t." we're taking their customers. the ratio with at&t right now, the ratio of in to out. >> so it's at&t. you're taking customers from at&t, that's what you're saying? >> we're taking customers from at&t to a ratio of 2-1. and the fun part is, people are asking me, what are you doing to do when they fight back? let me help you. they're in complete fight-back mode. i find it more hume use every day because it's about the customers. right now it's going very well and i'm very excited for not just our team and our company, but for our employees. and this is going to continue. >> john, it's great to have you. we'll keep an eye on the stock today. john legere joining us from t-mobile u.s. see you later. >> glad to be here. just getting under way. orbitz worldwide shares up sharply. we'll talk to the company's chief executive later on. ahead, exclusive interview with groupon's new not co-ceo,

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ubs financial services. art, on a morning where we see futures up. 2.6%. what's going on? >> well, you know, the yield on the ten year has been going down. that's why i've been saying this is less about tapering talk and more about market internals. i think you are bouncing today because you've got better data out of china and better data out of germany. that's giving you a little bit of a boost in europe. that's carried over here. but bulls need to seize control again. they're losing on the inside game. advances and declines, things like that. they've got to really get it together. they've held above s&p 1680. that's a really important area. if they can continue to do that, they might be able to rebuild and get full control. >> art, there seems to be a lot of blame, if you will, on the markets treading water based on the tapering, et cetera. i hear nothing about the closing of the embassies in the middle east and the worries of another terrorist action. what's kind of whispers are we hearing on the street about

that? >> there is concern about that. ramadan has officially ended now. people will be looking to see if the rumor mills start up again. the other day when the president canceled his meeting with putin, with that as backdrop, there was a little bit of a shock that went through it, gee, we closed the embassies and now nose to nose with russia. what's going on? you lost 20 points on the dow just with that. it's an undertow that you have to be careful of. >> there was a point a few weeks ago where dips were bought within hours. now it looks like they're being bought within days. if, in fact, there this is a near term support, pass some support, do you think we could get back to 1715, 1713, like some technicians are saying? >> oh, i think it's quite possible. but we've got to see the bullsry assert themselves. the key thing for the viewers to watch is the early strength. does it hold and can they build on it? the first part is to try and

hold it through the day and maybe build on it late in the day. what happens late in the session is often more important than what happens early. early you've got time to bluff. you can faint and do whatever. when the clock's running out you've got to do what you've got to do. >> do we need financials to participate? >> yes. that's a good point. the financials have gotten weak. in fact, that's part of the internal game i'm talking about. some of the areas that have shown key weakness have been just the one use don't want to see weaken if you're going to get a bull surge again. we'll keep an eye on that. art, thanks very much. will today be turn around thursday? the opening bell from that very balcony is in just a moment. s.

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it was a slight beat, of course, although down in china, germany, japan, again in the red but they did manage to post green in the u.s. which is something they said they would do. there's a look at the opening bell. and a look at the s&p at the top of your screen. here at the big board representatives from nyse government services going to be on here. apparently some kind of event in times square for the nasdaq celebrating its ipo fox factory holding corporation. maker of suspension products used in mountain bikes, snowmobiles, and other vehicles. take that again, chip? what are they -- i guess he's -- i guess he's taking a snowmobile through times square in the middle of august. >> that looks like turf. >> is that joe kernen? >> kernen is on vacation. it wouldn't surprise me. but nice job over there at getting some eyeballs, though. speaking of eyeballs, we'll keep a very close eye today on some of these retailers.

limited was really one of the ones that stood out on the plus side. comps, plus 3%. they were flat in june. in fact, june was the first negative comp from victoria's secret since 2009. that seems to have come back to trend. that's going to be open above 5%, ltd. even other names like elizabeth arden miss messed horribly and arden is saying that one north american retailer, which they do not name, ordered a lot less inventory for the coming quarter. >> oh no, can we look at jcpenney shares? >> that was my thought, too. but they did not name the player. >> wow. would love to see what the department stores are doing. the same-store sales today, so few report anymore but ones that did, it was a soggy. jc went any up a quarter of a percent. not necessarily under pressure. >> if we did know the name of the company that reduced the order was it a reflection of reduced demand and reflection therefore on the economy or a reflection on the company itself

and whether they are having additional problems. >> that's why i was wondering if they intentionally used that language as way to say, hey, this was specific to them not to us. again, this is going to be a little back and forth guessing game of intrigue today. >> interesting. we'll keep a close eye on groupon, of course, which we talked about already. and i'm just looking at components of the dow that seem to be holding up. also here about 60 points. caterpillar, citi, which of course will be reversion to sort of that material financial play. cyclical play that's been lost the passed couple of days. >> china came out with trade figures on the import side. better than expected. this of course after they've had issues with the voracity of the data and the way that people were gaming the trade figures to make a plap play on commodities. the extent to which that's going to keep markets up here seems like a little bit of a flimsy argument but could be helping something like a caterpillar today. >> sam cashin just mentioned eight secondaries today. tomorrow, seven ipos.

just saw one happening at the nasdaq. people taking advantage of a top, right? reports about blackstone finally getting out of hilton. bringing that back to the public market. >> well, you see that but also you do do see a pickup in m and a activity for cash. usually cash is the beginning of an m and a cycle whereas for shares is sort of the end of the m and a cycles. it depends on what viewpoint you want to start with. >> and you were mentioning as well when we were watching some of the level on the s&p 500 we're still about half a percent at the open but 1698. in your view here, you guys would almost rather see not a slow kind of grind lower throughout august but perhaps a sharper sell-off than what gives us room to grow? >> exactly. our chief technician was saying basically that we would need to see a decline, sharper decline to 1675, 1650, obviously not another pull back of 5% or more. but a deeper decline that provide a springboard for which

we break back i above 17 and go up to 1800. without that, he thinks we top in the 1745 to 1765 area. >> and this backdrop becomes important, carl, for what you're talking about. extent to which blackstone and others bring mega deals. >> that would be a very large deal, of course, one of the biggest lbos of all time. groupon up 23%. decisive move higher. this is a new high, previous 52-week high was 943 at 10.71. brings their market cap back to $6 billion. we're going to talk to eric lefkofsky in the next hour. feel twee to tweet us and use the #askgroupon because they totally redid their model. i mean, it's really the company -- we'll ask him later. but to what degree is daily couponing, online couponing part of their model now and it does strike you, sam, that facebook and groupon, two of the most beaten, at least publicly beaten names of last fall and early spring m managed to claw their

way back to some critical levels. >> well, i think that at first the feeling was there was so much hype around it that there was basically sold at the top and then the reality sets in that, oh, maybe there was just foam noond cappuccino underneath. so i think what we're finding is there is more demand out there just yet. and that the companies don't have to in a sense reinvent themselves every 30 days in order to stay in the public eye. >> i think it's going to be important to watch how the consumer names do today after we've gotten, again, another mixed bag of retail sales. more focused and more concerned about the middle 60%,s a byron wean put it us to. what about the financials as well. we seen them lag a little bit. art said to focus on them. >> right. well, i don't see how you can really say that they're not participating. at least over the intermediate term. maybe on a daily basis, yes. earnings, s&p was expecting to see 16% earnings growth in the

second quarter. that is almost -- for financials. now we're on the 26% area. so we've gotten better loan growth, higher quality of loans. we've gotten obviously the pullback from the bad debt situation. so the financials along with the consumer discretionary and health care remain in higher no home tum sectors. >> we saw some good signs from the senior loan officer survey. important gauge that was out earlier this week. >> the clash of the macro data which says the balance sheet for the consumers in great shape versus what retailers are telling us is striking. tesla is one to watch. looks like that's going to hold up after the premarket gains. going to -- has opened up 15%. again, on the beat from last night. elon musk feeling pretty good even though solar scti is down. and we mentioned mcdonald's, wendy's had a big story yesterday when he talked about the -- >> 5.5% comps. >> that's what they see comps

doing in the quarter based on the pretzel bacon cheeseburger. >> have you had one? >> i have t not. >> have you? >> i don't think i could fit it. >> it's massive. >> he calls it the best new introduction in ten years. and for nelson pelts who owns 21% of that stock, that's a nice gain. the shares up 42% this year. mcdonald's, up 4%. 42-4. >> that tells you the important -- i can't believe we're talking about fast food innovation. for them now, talking about yesterday, says, they -- this thing has runway. they can move with the pretzel bun to the chicken sandwiches, as well. and watch them go. >> and i think their advertisement seems to be doing a better job of hitting home to the audience that they really are going to address. >> you're going to get something new. we'll watch that closely today. of course, mcdonald's, a dow compone component. bob pisani is on the floor. >> breaking the three-day losing streak. at least for now. we are having one of the mosts fascinating ipos i've seen in years. you know biotech has been hot

ipo for a while. one of them is going today. that's intrexon. $16, the talk was $14 to $16. it's the high end. this thing is looking to open between $21 and $23. synthetic biology. artificial life being created here. with genetic engineering you have people going in and modifying organisms, the genome. synthetic biology, you're buildingartificialing orrism. you could create an organism that eats oil spills from scratch. you can create an organism that exhales hydrogen and uses the waste by product as a fuel source. you can create new life forms put on microchips that can be used to detect toxins, viruses, bacterias. synthetic life. obviously many companies evolved. this company is doing other things as well. it's an astonishing field that's going to explode in the next several years. this stock is looking to open up rather nicely. elsewhere, the global

economy, china import and export numbers. there were problems with the series. looks like they're trying to figure that out and straighten that out. imports and exports were terrific. i'm pourts up 11% year over year. well above expectations. surges in iron/ore, imports. copper importses were up 8%. this is helping the idea that china is stabilizing. there's been a lot of worry about this. exports, up 5.1%. they were strong into the united states. here's something interesting. exports were strong into europe. up almost 3% after being down for a while. that supports the thesis that at least europe is starting to stabilize. two little pieces of good news here on china and as an ancillary side effect over on europe. as far as the retail sales number, you guys have mentioned this before. it was a disappointment around the board. on earnings. they not only missed, they lo r lowered their guidance. i think liz arden is down.

liz ards den missed. disappointing day overall on the earnings front. same-store sales, only 19 companies reporting right now. what we have here, not great. some of the discounters, i saw fred's and stein marts, they were good. apparel firms, buckle, cato were below expectations. you know about american eagle, you know about that. aeropostale. lowered they guidance route 21. two things going on here. number one, there's a lot of teens that don't have any jobs this summer. think about that. how are they going to spend money in teen retail stores if they don't have jobs. wage has been meager for the middle class. i think it's a little tough to get some of that discretionary income going. gap is going to report after this close. right now intrexon opening between $21 and $23.

let's check in with seema at the nasdaq. did you get to ride that snowplow? >> i think i'm in line. exciting day here at the nasdaq, as bob mentioned. three days of losses. today is nasdaq posting a gain of about 20 points on the day thanks to that encouraging drait trade data out of cline that as well taas the jobless claim dat in the united states. tesla, groupon, both of those stocks on the move. defying gravity. encouraging results from both companies. on the flip side, fusion io, specializes in memory drives and has clients like facebook and apple. that stock moving lower. margins were heard by increase in marketing spend. and now after orbitz reported encouraging numbers, expedia not so great. our attention turns to priceline, the company reporting results after the bell. analysts say europe could be positive, positive driver for the online travel player. and lastly, a check on some of the smartphone names. ib krrks reporting that apple's

iphone continues to lose market share to android phones. blackberry saw its market share decline reaching levels not seen in the history of ibc's mobile phone tracker. carl, back over to you. >> thank you. let's shift to bonds and the dollar. rick santelli is over at the cme in chicago. >> you know how excited you get when you get a new car, that's how i feel when you get new ten years and new 30 years. we did get a new ten year yesterday. we're going to auction off a new 30 year today. made some of the comps with yesterday a little dicey. puts a little pressure. as you look at this chart you can see that coming into our time zone we are hovering around 250 yield. if you open the chart up you can really see -- well, first of all, the jobless claims at 8:30 eastern that put a little buy in it. that makes sense. lower jobless claims certainly can't be a bad thing. how good it is is what we really need to debate. when you open that chart up you can see why we are now really at

a turning point potentially. that 261 as you see on the left side of that bond chart, that was the first high yield close after the big sell-off to push rates up in may. and that is a very significant level technically. and if we over time consolidate and start to slide under it, that may mean lower yields. right now it's too close to call. so call it a pivot. 261 is your pivot. let's look at foreign exchange. if you look at a two-month chart of the euro versus the dollar, it jumps out at you as we're stable with this 1.33 handle and renewed optimism about stabilization in europe, i would put ans aasterisk after it. it's helping their currency market. that's a 7 1/2-week high against the dollar. but it isn't just that part of europe. it's also the uk. they had some information after their inflation meeting yesterday. you know they're targeting a level of unemployment just like we are.

so that is helping their currency at least for the time being. seven-week high on the versus the dollar. the dollar index, how long have we been talking about this formation? see the bottomsing at 81? sure. 81.5 in the middle but slipping below a very large double top. if you subscribe to technical analysis. back to you, kelly. >> all right, rick. thank you. it was a snowmobile, not a snowplow. anyway, let's head over and check out the action and commodity business. sharon epperson at the nymex. >> a lot of what traders are talking about today is the july trade data coming out of china and the impact on metals in particular. look at what has happened here to copper. looking at the highest copper prices we've seen since may. the fact that we saw copper imports rise 12% year over year, that is certainly a factor as dennis garmin points out the economy in china is doing better than many expected than particularly those short china. it's having an impact not only

on cooper but look at silver. silver is appreciating as well. gold is higher on the session. looking at many of the metals that are up. but crude oil ignored the china data and focused on jobless claims and the fact that we have plenty of oil here in this country that may not be pleating the demand that we see right now which is not really enough for all of the oil that we have. that is what some traders are talking about. they're also talking about natural gas at a five-month low ahead of the data we had coming out at 10:30 and we will bring you those live at 10:30 from the energy department. back to you, carl. >> sharon, a lot going on in your world. thanks. tesla continues to sizzle. a surprise quarterly profit for the electric carmaker, saying the stocks on a tear would be an understatement. how much power does tesla really have left though. we'll talk about that after a break. as we go to break, dow now 54 points. geoff: i'm the kind of guy who doesn't like being sold to.

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tessa la is surging. colin rush is a senior analyst at north link capital markets. out performer on tesla and a target of 2:30, colin. tell us how we get there. >> so we're looking at 2020 in terms of the target year. and what's at stake for this company is whether this is a disruptive automotive company. we're making a bet they are, they've got a fundamentally different cost structure and different product they can offer the market and they will able to gain what amounts to less than 1% share of the auto market. >> you make the point musk has been smart. he raised a lot of cash when he could. and that's going to keep him in good stead at least in the near term as he continues to wrestle with issues of, i don't know, capacity constraints? is that still an issue for these guys? >> absolutely. their order rate is 2x what their shipment twhr quarter. the real issue is the supply chain at this point.

making sure they get all the parts that they need in time. they did actually produce 8% gross margin increase this last quarter. >> wow. >> so the profitability still looks in sight and hitting their target margin at 25% by the fourth quarter. >> carl accused us strategists of being in the 1700 club. are analysts in the 200 club for tesla. and i can't help but think that tesla, tulip, same number of letters, are they just setting themselves up to be bought by a bigger company? >> i think they're setting themselves up to be a stand alone company. potentially they could be bought. you know, as the market moves over. but i think at this point, you know, people are giving them credit for being a stand alone company and i don't think thing a acquisition is in the cards for these guys. >> what is the issue of gap versus nongap earnings and making the earnings look better than they were because of accounting tricks? >> i think everyone in auto industry uses leasing. that is the driver here in the nongap, they sell cars.

titles are owned by the banks and they are getting paid for those cass up front and the gap earnings reek niz when the formalities of the ownership of the car really follow through at the end of the day. they also paid off $16 million to exit the do loan this last quarter, that had a 12 cent impact on earnings number. >> he literally laughed on the conference call about the threat from bmw. would you be laughing? would you be laughing it off? >> at this point, you know, the car isn't comparable, what bmw offered. it's in poor taste. my personally. but, you know, give the alum credit for doing other things that other people didn't think was probable. >> what did you first think when you saw the bmw vehicle? >> i thought it was fantastic news for tesla. it demonstrates how great the product is and gets moreinfrast awareness in the market. >> what happens if all of a sudden ford starts making natural gas f-150s and it's

easier for me, i understand it more so than with elect trick vehicles. is that a big problem potentially? >> i don't think so at all. what we're talking about 2020 numbers is less than 1% of teotl auto sales, different auto segment. it's progressing but still isn't fully developed at this point. and there are going to be multiple solutions for transportation going forward. we think natural gas and electric vehicles are very much both a party of the story. >> good stuff. we'll see what happens. thanks for coming in. >> thank you. when we come back, morgan stanley's chief u.s. equity strategist adam parker, s&p target, 1600. one of the lowest on the street. we'll talk to him about that and some of his outlier scenarios, too, when we come right back.

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get some final thoughts here. art cashin earlier in the hour suggested watching the early strength and we've lost some of it, sam. does it mean anything to you today? >> well, today, i think it just is a reminder that we're in a very, very slow period for the market and that really investors are looking for a catalyst. we already know that global economic growth is at best half

speed, that valuations on the s&p and other markets are attractive but not compelling. so the real question is what's going to be the catalyst to drive the market back above 1700 and toward the target we have, which is 1750. plus, our feeling is that the market is going to gradually accept the fact that maybe the fed starts a tapering in december, not in september because with everything still being so tenuous, they would ratherer on the side of stimulating longer than shorter. >> you're an err, not an err guy. just a question, does it matter because the typing of the taper matter? >> i think that psychologically investors are already shifting from a liquidity led bull market than a fundamentally driven one. and really just the longer that we talk about this tapering situation, the more that it holds us back from that m metamorphos metamorphosis. it's been good for the equities because investors move out of bonds and we've had positive

monthly price changes in the s&p, in i where from 0% to 6%. >> flows, too. >> we have a ways to go. >> sam, it's great having you. every time. >> my pleasure, thanks. simon hobbs here taking a look at the next hour. >> good morning, carl. google is spiking today. the man of the home, the man confirmed of ceo, eric lefkofsky. groupon is spiking. he confirms 17% stake will join us life. and morgan stanley adam parker he thinks the market will be lower by the end of the year. also take a look at how increasingly now google is taking another bite out of apple. hour two of "squawk on the street" next. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes!

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plus, the markets breaking a three-day losing streak. and the s&p 1700 club just keeps on growing. we're going to talk to somebody who has a more cautious view on the markets, recording them 100 points lower. morgan stanley's strategist adam parker. shares of tesla all charged up thanks to a surprise second quarter beat. can ceo elon musk brush off the negativity. and google has taken more market share away from apple. we'll find out what apple needs to do to get back on top. first up, though, seven have a price target of 1700 or higher. one who is not in that 1700 club is adam parker, chief u.s. equity strategist for morgan stanley. says s&p is more likely to go down from these levels to 1600 by year end. he joins us this morning. adam, it's good to have you back. >> good morning. >> you actually do a nice thing, i think, which is you have you base case and you also layout some bull and bear cases that have wider ranges.

are you leaning into either the more bullish or bearish camp aside away from your base? >> we've been arguing for some time certainly that we think the bull case is more likely. i wouldn't describe myself as bearish. in fact, i think i'm getting more bullish than some of think colleagues. you know, we've been set that 1600 target when we got more bullish on the market when we came on the program at that time. the problem is i think we've talked about this before is we have a framework where we try to model the multiple and as you know, that's tough. it's hard to bottle the multiple. >> adam, adam, hang on a second. you're saying that right now you're more bullish than most of the street? >> i think that my rhetoric is pretty bullish. we've been arcing of we oh. >> what do you mean your rhetoric is bullish? shouldn't you be raising your price target? >> we have a bull and a bear. >> i know. >> we think the chance of the bull chase is higher. i think xwhat a lot of people people do in your 1700 club is continuously raise the target a

few percent. i try not to do that. i don't think the target means that much. it's more about the pat to get there and framework. >> wait a minute, adam, is it your job -- >> we'll probably try to think about what the earnings could be next year and what the pmultipl could be. >> is your job to idea fay what price you think the s&p 500 is going to be over a certain period of time? because if so, all that matters is your likeliest case for what that price is going to be. >> i think that's extremely small part of what i do, to be honest with you. i know it's a big part of what you think we do. what with try to do is provide investment advice for people. try to think about various scenarios for the market, the earnings, earnings trajectory. >> but you have to pick one of those scenarios. >> when we try to out perform our market with the investment, with the portfolio, with the themes. that's what i spend most of my time doing. i think the target is something you try to have a framework wor, try to forecast earnings, try to forecast the multiple. we've argued and written a lot because it's hard to forecast that multiple.

>> in fairness, you're being on a consensus on this and more bearish, i believe it was just last year made you like the top name on the street. so i don't mean to pick on you. i just think that we need to be honest about when you're right and when you're wrong. >> i'm very honest about that. in 2011 we set a target for the s&p. on january 1st, traded there. december 30th at 3:00 p.m. in 2012 -- exactly. >> off by 18%. we published that and have an audited portfolio with several thousand people who thfollow it. it's not an issue of anything of other than just trying to have a framework that people can follow. the framework is two things. if you have a target, one is the earninging outlook, right? >> right. >> and we have a view that the earnings are going to slowly improve in the second half of this year into next year. i think our framework has been accurate on earnings. >> certainly it's not -- yeah, it's not easy to be bearish on the street. and especially in a market like this. how much pressure are you under when it comes to, you know, i'm sure an employer and people on

the street who would generally like to see you being in that more bullish camp. >> that's not the case at all. i work at a firm where i think we have a lot of integrity about the process and we're clear about the framework and people want me to publish what i believe and communicate it to our investors. i think i do it well. the market can move in ways you just justify with a framework. if i told you a year and a half ago, i probably said it on this program, certainly on your network, that we will have no earnings growth in the s&p in the second half of the year, that we were going to have the lowest nominal ten-year in the history of the u.s., zero gdp in the u.s. in the fourth quarter, if i knew that a year before everyone else and how could i argue for the multiple engine pangs for that ratio to go up. i didn't. i argued for it to contract and it went up for monetary easing in that i'm market. it's just not easy to forecast the multiple and we publish a lot about that. i think the bigger issue is from here, what could make the market go up or down? what we're focused on right now is really not that the base case is that great. it's probably not. sure, you know, i think we could

get maybe a better entry point in the market. i think what's defining what's going on right now is the lack of bear case, the lack of a high probability of a bear case. the lack of severity of a bear case. i think that's probably what's more kind of driving the market multiple than it is maybe the base case just being, you know, slow and steady improvement. >> you know, adam, i don't think anybody is questioning your integrity or the professionalism of what you do. but what is, i think, what most investors and your clients would want to know is where you think direction ali the market is going to go compared to other asset classes, other equity markets around the world. huge question over what happens to fixed income. how would you rank them given what you know now? >> sure, what i do is sat on an investment committee for morgan stanley's private wealth management business. a handful of us who do that. four months ago we went with a case to be overweight equities and overweight cash relative to the bonds. asset allocation bar bell. i think that was tied well, might have been lucky, but

fairly well because we were worried about yields backing up at that point. if you look at a longer-term view. there's always that tactical thing, what do i do right now? is this the point for the market versus sort of structurally how do you think about equities versus bonds. the other thing you point out, simon, rightfully, is the u.s. looks more attractive than other regions right now where you're seeing volatility concerns across all four of the bricks. >> adam parker joining us from morgan stanley. >> thanks for swhaving me. >> really appreciate you coming out there and being honest about all of this. >> of course. any time, guys. take care. coming up, more trouble for jpmorgan, the big bank facing criminal and civil investigations by the justice department involving sales of mortgage backed securities. bertha coombs has more on that. >> it was clear five years ago when jpmorgan bought up washington mutual and bear stearns there were risks involved and coming home to roost. revealing in an s.e.c. file that

it is the target of parallel civil and criminal investigations being conducted by the u.s. attorney's office for the eastern district of california. that probe relating to its mortgage-backed offerings. leading up to the financial crisis. the bank disclosing in its quarterly tenq filing that it received notice in may of this year and that the california eastern district's civil division had come to a preliminary conclusion that jpmorgan had, quote, violated certain federal securities laws in connection with the subprooim and alt-a residential mbs offerings during 2005 to 2007. now, sources familiar with the investigation says that these preliminary conclusions, while they could result in charges, they won't necessarily. during the most recent conference call jamie dimon told investors the 600 million in legal costs during the quarter had, quote, come from a variety of things, without disclose that california probe that they talked about in may. in the 10q, jpmorgan raised

estimate of losses from legal proceedings by about a billion dollars saying now it could go as high as $6.8 billion. it has responded to a number of s&ps and requests for information from other federal and state authorities without naming them, but according to the "new york times" the u.s. attorney's office in philadelphia is also looking at whether jpm sold mbss without insuring the investment met underwriting standards. that would make three different u.s. attorneys offices investigating the mortgage-backed business including california, pennsylvania, and the southern district of new york, in addition to a lawsuit brought by new york's attorney general alleging that investors lost some $22 billion on jpm mbs products. you can see the stock is flat. investors have taken this in stride. neither jpmorgan or federal prosecutors would comment on the status of that probe in philadelphia. carl? >> bertha, thank you so much. let's send it over to josh

lipton and get a quick market flash. josh? >> carl, it is a tough morning for fusion io. lost revenue of $106 million. undershoots the company's own projection. operating expenses injured. forecasting sales for current quarter and new fiscal year. disappointed the street. you see the reaction from analysts today. fbn, credit suisse. simon, back to you. >> thank you very much. ahead on the program, the man confirmed now as groupon's permanent ceo, ever rick lefkofsky will be with us live reacting to the huge surge we had on the stock today and talking about how he feels about the company as it moves to new areas. don't forget this man owns a 17% stake. don't forget this man owns a 17% stake.

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shares of groupon hitting the highest point since the company's ipo on the back of a better than expected second quarter earnings report. naming fired ceo's successor. let's bring in julia boorstin joined by him, eric lefkofsky. now only ceo of groupon. julia? >> thank you. thank you, eric lefkofsky for joining us from chicago. we appreciate you joining us in your first full day of ceo. so, eric, congratulationses on

the stock, up 27%. and also on the new position. so now that you've been appointed permanent ceo how do you plan to change the company? >> appreciate it. look, we're very focused on the same things we've been focused on for the past few quarters, i've since i got here in late february. focused on the migration to mobile. we're fortunate we have over 50 million people who have downloaded our apps. 7.5 million this quarter. almost 50% of our business in north america is mobile. we're focused on migrating from being a daily deal e-mail business to being a true e-commerce marketplace where we now have over 54,000 deals live every day in north america. and we're focused on taking what's working in north america where we saw 23% growth in q1 accelerate to 30% in q2. and really give that to the rest of the world. we're by no means done. we've got a long way to go. >> now, you're alluding to the fact that though you have seen significant growth in the u.s.,

there is still significant weakness internationally. what's your plan to get the rest of the world on track? >> i mean, we saw some good improvement this quarter. europe shrank 8% year over year in q1. and that accelerated to 4% growth in q2. so that's pretty significant growth. we're now focused on taking the stuff that works. we know when we bring more deals to the market it has a huge effect. when we can get consumers to basically start with groupon when they want to buy anything anywhere, any time, we know that has a huge impact. and we're basically trying to take what's working, playbook in north america, first get it to europe where we've made some good progress and try to get to it asia and latin america and the rest of the world. >> speaking of what's working, you have seen mobile growth here in the u.s., but how do you plan to generate that same kind of mobile growth over seas? >> we're actually seeing our mobile growth in terms app downloads and engagement faster

in outside north america. it's growing from a lower base. north american market, groupon hasn't even celebrated its fifth birthday. we're still a very young company. and yet our mobile business is oldest in north america, now have almost 50% of our business being mobile. but the growth internationally and the growth android is even faster. >> now you talked both today and also yesterday on the earnings call about trying to transition away from e-mail marketing, sending people e-mails with daily deals to becoming just a regular e-teller. but if you're a regular e hl teller you have so much competition, how will you distinguish what groupon stands for? >> i think we're basically distinguished already. people think of us as predominantly this marketplace of unbeatable deals. and it's a highly cure rated marketplace. it also happens to be a highly local marketplace. the reason why groupon is probably the largest mobile e-commerce in north america, you

know, maybe in the world, is that it's inherently local. you're out and about and can basically explore the world around you in this curated way. >> is your goal to eventually move away entirely from that e-mail marketing approach? >> you know, we're fortunate that e-mail today accounts for less than 40% of our business. i mean, for me that's staggering when i -- in the early days of groupon it was almost 100% of our business. we made great progress in moving away from e-mail. e-mail is still an important part of our business. i mean, we have over 200 million subscribers worldwide. 43 million customers. these people are getting e-mails from us again that are highly personalized. we build some amazing denlg in north america that we're taking to the rest of the world where we have this bank of deals we call deal bank and then we have this fantastic technology called smart deals where we pull from this bank and send it out to customers in a way that's relevant to them. e-mail is an important part of our business and will be for some time. >> eric, we all remember when

international was a major part of the story, trying to build out, outside of the united states. we keep hearing from analysts saying the easy money in the stock market, anyway, in the u.s. has been made, let's try to get some exposure to, say, europe. is that something that you're ready to start leveraging right now? >> i think groupon inherently leverages that. one of the interesting parts about our business besides the fact that it's highly correlated mobile is it happens to be international in nature. we have over 11,000 employees operating in 48 countries. we do about half of our business outside north america. as we start to turn around those markets one of the great things about this particular quarter is we were able to break out the world in terms of three segments, north america, europe, and the rest of the world. and where people can now see is not only do we make money in north america, we make money in europe as well and has since the middle of 2011. i think people who are looking for that kind of global e-commerce exposure might naturally think of groupon as a place to be. >> eric, why have you been

confirmed of ceo. did you push yours forward with 17% stake and just go, look, if a job is worth doing it's worth doing yourself? >> no, not at all. i mean, ted and i jumped into this in february. we jumped in because we felt it was appropriate. and what ended up happening, we had every intention of conducting a search and ted was -- ted is my co-ceo, was run that process. i think what ended up happening is the company started to really get focused and perform well both in management team and i and the board felt like a transition at this moment in time would actually be more disruptive than helpful, we just had too much to do. the basic foundation of groupon is still being built. this is a company that hadn't celebrated its fifth birthday. when you're still building the model, having a founder, having something who is prooirnial, can be an asset. >> isn't there a danger here though. i understand that the market is really pleased with the way that you diversify and what you do and how you do it, but isn't there a danger here that you

become a jack of all trades? head-on with amazon and walmart and even open table now in restaurant reservations. jack of all trades, master of which one? >> yeah, i think we're fundamentally a master, i think, of mobile and local commerce. we sit at the intersection of those two. and when consumers are out and about and want to buy something the question is what do they want to buy? certainly sometimes they want to buy food and drink or health and beauty or activity but they also want to buy hotels and products. it happens to be pretty correlate and pretty centric around mobile and local. as we've extended into these new categories it's easy for people to think maybe they're abandoning their local rouots. as amazon went from books to consumer electronics and other categories, it tends to be a natural extension. and the people who have no trouble understanding what groupon is all about are our customers. they love this stuff and they buy it and they're engaged and that's what we are focused on.

>> your guidance was on the light side of expectations, of analysts expectations. why is that? >> first of all, our full-year outlook was right on. the guidance we set last quarter. and our revenue guidance was pretty much right on as well. maybe a few million dollars below but basically right on. we told people in the past and we are consist at the present time with that message, we're investing in the long term. very focus and the long term. groupon should be one of the great e-commerce companies in the world an stilled in midst of build that business and trying to figure out how we migrate from being a predominantly e-mail daily deal company to being a predominantly mobile e-commerce marketplace. that takes investments. this quarter we're fortunate we were able to once again invest in marketing initiatives to drive customers into the funnel and to drive fepeople to this n experience. >> we solicited some questions on twitter and we would like to ask you. is groupon a truly viable long

term on its on or an eventual takeover candidate? >> i think at this point it's -- i don't know the exact place in which we sit but my guess is we're probably the third largest e-commerce company in north america behind amazon and ebay. so it clearly has reached a certain scale that it can survive and should survive for a long time on its own. that's probably the best answer to that. >> and taylor asks, how do you feel about retailmenot. is that a threat? >> i don't follow retailmenot that closely. i've heard good things and things i've read in the paper about their ip okay and obviously exuberance around their model. i'm not that close to it to give you a good answer. >> you're probably aware that your co-founder and former ceo andrew mason in his time since leaving the company has come out with an album of inspirational music. in case you haven't heard any of it we want to play part of a song. ♪ i know you feel small like one

in a million ♪ ♪ like maybe i've heard it before ♪ >> we want to ask you here, what do you think of this next phase of his career? what do you think of the music? >> yeah, i mean, i hadn't heard it until now. my first reaction, i was in a school play and i sunk this kermit the frog -- something about a rainbow, rainbow connection, i think. and that was my first reaction. so i had not heard it. but look, andrew is a super talented guy and he handled himself in the face of amazing stress and tension with nothing but composure and i have nothing but respect for him. if he wants to go into the music company or start another company, he will be successful. >> you're right, eric, it does remind me of "rainbow connection." eric lo lefkofsky, thank you so for talking to us. >> thank you. thank you.

>> good sport to even answer that question, eric. our thanks to you. look at the markets. dow is now in the red. we were up 86 at the top of the intraday high. we're off 100 points intraday anyway. cashin said, watch how the early strength holds. now he's saying watch how they hold this. s&p managing to hang on to a gang. when we come back, tesla adding more gains after the surprise second quarter profit. as consumers start to cut back, is it sustainable? we'll talk about that when we come right back. [ male announcer ] here at optionsxpress, our clients really seem

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welcome back to "squawk on the street." i'm josh lipton. china recording better than expected trade data. that given some metals a lift. copper, the red metal moving to

a two-month high. check out freeport ticker fcx. mines produced more copper than any other publicly traded company. up today, still down 11% this year. simon, back to you. >> thank you, josh. up next on the program, find out why apple's iphone is losing even more ground to google's android. with that, what they need to do to get the market share back. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]

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i'm sharon especially poppe nymex. after the latest report of the energy department showed a much bigger than expected increase in natural gas storage levels up 96 billion cubic feet in the last week. the expectation from plat survey analysts scored increase between 74 and 78 bcf. and just last year the increase was about 42. that was at least the five-year average. last year was 25. so we're seeing a much bigger increase in storage than we normally see for this time of year. and, of course, we have not seen the type of cooling demand that you normally see for this time of the summer. mild temperatures definitely a factor in the weakness that we're seeing in natural gas. natural gas futures immediately sold off about ten cents to what what analysts were predicting technically would be the low of the session. $3.13. around there. and we'll look to see whether or not natural gas is able to stay above that low or if it breaks through even further. again, this is a very bearish

number for natural gas today. >> sadly, too cool in new york. thank you. the latest report from research firm idc says that apple is losing ground in the smartphone market to google. the report shows 80% of the smartphone shipped worldwide during the second quarter of this year ran google's android operating system. joining us now is ramone lamus who is mobile phone research manager with idc. welcome to the program, sir. >> hi, good morning. >> this is actually better than expected for apple, isn't it? >> i think in terms of volume standpoint it is. if you look at a lot of the street expectations a lot of folks were talking about 26, maybe 25 million. but the end result was a good healthy 31.2. at the same time, you take a look at the overall growth of the market. apple ended up losing some market share and android was the big beneficiary of that. >> though presumably when they launched the new iphone in the fall, that will be reversed. >> that is the expectation.

if you look at history, any time a new iphone launches to the market, apple brings back a lot of the market share. seen it in the previous quarters. looking at a company that releases only one model a year. and if you are any other company not named apple, you are looking forward to, y know, that period or that six to nine months after that iphone has been launched to really make a huge splash. that's what we see. take a look at what samsung did, what lg did, what htc did and mo nokia. several companies released the new devices to the market and took advantage of that dead space that apple doesn't have a new product on the marked. >> you know, i'm struggling to find -- this iss a nating but i'm struggling to find what use is to really apple shareholders because you're really -- you're really comparing two different things. apple is trying to sell upmarket hardware around the world and maximize profits on the hardware. conversely, google is giving android away basically for free, almost, for anybody who would like to use it.

is it actually relevant to shareholders? >> i think this time of the year is actually very relevant because you're not going to just want to keep all of your eggs in ones basket even if that basket is called apple. this is the time of the year to look at the other companies and also to prepare for what apple is having in store. let's look at what mr. cook said in his 3q 13 earnings release. and me made a lot of hints. they're looking forward to the fall, the winter, and into early 2014 to come out with a lot of new products. now, let's face it. apple is not the kind of company that comes up with just any product at any old time. so this is the time that you want to start warming up the engine to look at what apple is going to do next. >> ramone, let's talk about all of those also rans that we see in the market, right? we're still wondering if blackberry's ever going to return with something more powerful than the z or the q. nokia continues to just lumber its way along. do you see any of those popping

into the next league getting closer to the market leaders? >> want to take a look at blackberry and windows phone which is pretty much nokia by that extension. i look at these as who is going to be coming up with that third place because right now the volume numbers on a quarterly basis at least, these are not going to be competing with the 70 million that you see from samsung or the 30 million that you see from apple. but right now what wee also see among a lot of carriers and a lot of users out there is that they want choice. they want options. right now apple -- excuse me, blackberry has something very strong and i'm looking forward to their next generation devices which presumably will come out this year. and nokia just released the new lumia 1020 which by all accounts is a very strong smartphone. it's not the kind of windows phone that a lot of people scoffed at being not an android, not an iphone. it's actually a very strong device. i expect pretty strong results in the next coming quarters from

them. >> presumably the one to watch has got to be samsung with reports that it might launch its own mobile operating system. >> and that is going to be the dark horse of the smartphone market. because as strong as samsung is, it brings a lot of equity, a lot of design to the table. there's something about new operating system that i got to stop and take a look at and say, what are they going to do in terms of a device, what are they going to do in terms of the experience, what are they going to do in terms of how many applications they're going to have because those are the top one, two, three things that allow consumers look at first before buying a smartphone. think of it this way. when you buy a smartphone it's like buying a car. this is something that you're going to have a long-term relationship with hopefully and it's something that you will be using every single day. and so if you don't have those three items, you know, kind of lined up, you know, this might just lay on the shelfs a little bit longer than you would expect. >> i'm really tempted to ask the

guy from idc what handset he has. perhaps that's a bit too personal, ramone. >> not at all. i think part in parcel i get to play with a bunch of devices. in my hand right now i hold a nokia lumia 920. >> wow. >> i also have a galaxy s4, blackberry, it's the fun part of the job. >> showing off. nice to see you. ramone lamas joining us. should know that all three indices are in the red. the dow led them by losing 86 points on the top side and adding 43 points in losses to that. nasdaq is down and the s&p which is really going to be the one to watch here, guys. 1689. right where a lot of technicians are looking for support. holding 1690, they argue set you up for retest of a 1715. but that's clearly -- actually market newton, we should say, if you break 1680 we're in for more exaggerated tough times. >> come on. this is a relaxed market.

this market is going virtually nowhere. given we think we may have tapering confirmed for september, i think that's holding in remarkably well. >> stovall's case earlier was the market is getting used to a december taper. bullish case. >> he also said he would like to see the market do worse so it can bounce back. amazed we've gone from plus 80 to down 40. triple digit swing and it's not even 11:00 a.m. >> summer lull. if high frequency traders can do it on busy days on days like this. >> perhaps. >> indeed. >> still the same money. same money in august as the price action. >> i get it. tesla stock nearly quadrupling this year and a surprising quarterly profit keeping the no pmomentum up tod. does ceo elon musk have more up his sleeve? we'll find out when "squawk on the street" comes back. what you wear to bed is your business.

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welcome back to "squawk on the street." here's a look at the s&p 500. down about a tenth of 1%. we wanted to look though at the sectors. financials are lagging. they're down a quarter of a percent. six out of ten sectors are in the red. telecom, the worst performer. down almost 1%. meanwhile, materials holding up better. adding they're about 1%. looking at the dow, similar thing happening there as pointed out, carl, earlier. caterpillar one of the bitter performers. they may have something to do with the rebound in sentiment in china overnight. not enough to turn the market around. tesla though, shares are on full speed this morning after profit blew away what the street was expecting. interesting to see really the stock not coming off of the intraday high even as the tape has gotten a lot weaker. the conference call last night, elon musk asked what he thinks about his newest competition, the bmwi-3. >> i'm glad that bmw is bringing an electric car to market.

that's cool. i think there's room to improve on the i-3 and i hope that they do. my comments about that -- sorry. >> scott burgess is the editor of "motor trend" and joe brown is the editor of "wired guys." glad to have you. >> good morning. good to be here. >> scott, i know we're not here to discuss the stocks specifically. you know it's up. it's been up a remarkably all year long even though they have capacity issues. he's got issues with some of the dealer. the dealer structure in this country. now he's got a big powerful competitor on his hands. how does he hold up? >> tesla has been the golden child in the auto industry. it's just -- its reputation

seems to outplay everything else. you know, the downside of the bmw is that the i-3, you can buy two of them for the price of one model s. so i could see why he wouldn't want to say that it's a nice car. >> is it a nicer car? are they even comparable? >> i don't think they're comparable. it would be comparing a model s -- 1$100,000 car compared to $40,000 car. it's just a much -- much more interesting take. don't underestimate the model s though because it is a phenomenal car. it's just also very expensive. >> joe, to what degree is the -- i don't want to call it the cult but certainly the intrigue, the hype, around tesla. how much is it outpacing realistic expectations, if at all? >> well, i mean, it's important to remember that they're even creating their own hype around these numbers, right? you say that tesla is up 26 million.

the truth is if they were abiding by the sort of gaap, generally accepted accounting principles they would be down $30 million this quarter. it's not -- they're not doing the math in the sort of proper way. sort of doesn't matter for tesla. they're a young company and surviving so much on this brand halo. you see those cars drive down the street and you stop and you look, unless you're in san francisco where you can't turn a corner without seeing one. but the i-3 is sort of, it looks a little hokier and it doesn't have the cool factor that tesla has right now. that's extending everywhere, even into the market. >> accounting has been getting attention this morning. when we talked about it a little bit earlier in the program the response was, look, yes, it would change what they reported for the quarter if you look at gap versus nongap as it does with a lot of companies and a lot of companies in this stage of development. so again, you yourself just said there are other ways of looking at their performance and just frankly looking at the number of cars they're selling to gauge what's going on here and they're

selling more cars. >> they're selling quite a few cars and they're upping their output to 500 cars a week which is substantial number for a company who two or three years ago was sort of looked at with a little bit of a wink and an elbow nudge, you know? >> scott, let me just come back on the price of the cars. i appreciate as far as joe cease concerned that the tesla is super cool around san francisco or the west coast. but, you know, price is 1 $100,000, it's a lot of money. bmw is far more likely to be selling electric cars $30,000 or $40,000. if you were looking at real market share, it's got to be pushing towards bmw. however much you may scoff at it on the corner. that's the volume end of the range, isn't it? >> yeah, absolutely. but i mean, it's also worth note that tesla is planning on having a volume car coming in the next one or two years as well. you can't expect tesla to adjust to the market as quickly as bmw though. bmw has a worldwide network of manufacturering to rely on.

>> in terms of understanding where you are as an investor, barriers to entry are after such a big move on tesla, surely that is relevant, that they're out to eat your lunch, they're out to eat the lunch in mass production and at a lower price point. >> absolutely, yeah. you can't not take bmw seriously as a competitor. musk sort of cracked up when mentioning it, is, again, more the marketing end of tesla, the, oh, yeah, these guys are so adorable, coming out with this little cheap car. the model s is awesome. that's the way he has to as a spokesman for the company keep pushing this company forward. >> certainly the stock's getting pushed forward to the tune of 15%, 14% today. appreciate that discussion. >> thank you. ahead on the program, orbitz has apparently missed estimates on the headline figure but has a deciding more sunny outlook for the future. it's due to a writedown. we'll talk to the ceo about that later on live from chicago. but first, don't call it a comeback with santelli, questions the european

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welcome back to "squawk on the street." what's today? thursday. here is thursday's edition of "the santelli ex chain."

i can't tell you how many times in the last three, four weeks i have heard, that's it, europe has turned the corner, and i'm not saying they haven't. i'm just saying let's look at this from an investing standpoint and kick the tires a little bit and see where the gold trades may be hidden. first of all, i think it's important to note that there's certain things that are hard to refute. if you were to take a look at the dax, the german stock market, or the cac, the french stock market and look at it from the last four to six weeks and then even on a bigger time frame, what you will notice is that the premiums underscored by all those adages about how we're the cleanest shirt in the closet, all the relative value issues, what you will find is our overperformance has given way a bit of their overperfo overperformance and it makes perfect sense. let's think about the way markets work. there are premiums built in. usually markets never do anything halfway. think the taper.

they do it two helpings, two scoops. so when there was issues that europe was going to be in a quagmire for a very long time and there were even issues as to the solvency of some of the southern european banks, we put huge premiums with lower yields in the u.s. as those started to disappear and the idea that the fed may at some point disappear, we saw how those premiums came out. same could be true for equities, but the real issue still remains that stabilization is one thing and that does warrant moves. but sustainability is the main issue for the next round of trades. so you have to look at sustainability. are we going to see more commodity crashes or do we actually believe some of the data out of china regarding some of the things like their imports or exports, their deaf silficit are real. is it only germany rising to the occasion and how much negative information may not end up in the press until the september 22nd german elections? when it comes to interest rates,

this is noted in the pattern. yes, this isn't a beautiful chart, but you have seen me use it before. this is ten-year. it basically starts around the 20th of june. why it's important? rates went up aggressively in may. the first major top was 2.61. then we had 2.74. that was the employment after fourth of july, and then the most recent employment. the reason this is important is we start to get a below this 2.61 on a relatively narrow range, we could slide under it. you want to use this as a pivot? so say traders and let's see if the bond market gives it some heads up on how we're supposed to trade the european equity markets. back to you. >> check the powerball tickets because you could be a multimillionaire. we'll go live to the store where one of the winning tickets was sold when we come back. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx.

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this stop and shop in dayton, new jersey. they will be splitting $448 million. one of the winners hopefully will be showing up here today. we can tell them there's a cake inside waiting for them. if they didn't want to wake up just for the cash, maybe they will come in for the cake. it looks pretty good. it's a sheet cake. this is the fourth largest to theow lotto winning in u.s. history. if it feels like the lotto winnings and the joackpots have gotten bigger, that's because they have. back in 2012 powerball changed its rules changing the ticket price from $1 to $2, so the jackpots have been spiraling out of control going ever higher faster and that's why you're seeing these massive winnings. after taxes they will be splitting $258 million, but honestly, i'm not even jealous.

i think you guys -- i think we didn't need to win it because there's just too many people. guys. >> thanks so much. interesting. as we sit here at the new york stock exchange, it makes you wonder where you would put an easy $400 million. equities, bonds? simon might buy some international, some european etfs? >> maybe. >> i think we need you and rick to debate. >> if i had one, wouldn't i give most of it to the government. >> well, you would give a good chunk of it, that's for sure. >> now to news involving the highly anticipated hilton ipo. blackstone selecting four banks to lead the initial public offering as it prepares to bring one of the largest leveraged buyouts ever back to the public market. blackstone's president and coo was on "squawk on the street" last month. here is what he had to say about the hilton subsidiary then. >> the company is doing fantastically. i think we told people yesterday that the earnings before interest and taxes and

depreciation was up 17% last quarter at hilton and we're accruing equity value very, very rapidly. so no rush from our standpoint. it's a great company, got great management. and it will be a hot ipo some day. >> no rush he says, but it looks like we will get it in the first quarter of next year, and they've got to get out while the metrics in the hotel industry are still very positive, and for the moment they are. revenue for available room is rising because supply is constrained, but that won't last forever. >> didn't "usa today" just have a big piece about how the hotel sector is recovering. and la quinta. >> i have been reporting about the recovery for 18 months but i'm glad it's made it to "usa today." >> have there been real moves to develop new property? >> there are in some markets, for example, new york, but elsewhere it's still constrained because financing is still very constrained. you look at grand hotels in markets like l.a., you probably

wouldn't get the financing now. for hilton it's been about racing abroad. >> that would be a massive story when it hits. >> huge ipo. >> simon, we'll see new a few minutes. dow is down 37. if you're just joining us this morning, here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> we're at new highs, and i know a lot of investors are cautious or skeptical. >> are you? >> i think it's still profitable to put money to work today. i think we'll be higher by year end. >> i would tend to think we probably could end up seeing some more price weakness once we get to that $1,750-plus level, maybe september, october, november time frame. >> it's a very unsatisfied customer, especially with -- and you know i couldn't go a whole

interview without telling you where these customers are coming from. it's a company that has a "t," but not this "t." we're taking their customers. >> there's a look at the opening bell. >> what's at stake is whether this is a disruptive automotive company and we're making a bet they are. they have a fundamentally different cost structure and a different product they can offer the market. >> i think my rhetoric is pretty bullish. we've been arguing -- >> what do you mean your rhetoric is bullish? if it is, shouldn't you be raising your target. >> we've been saying we think the chance of the bull case is higher. >> as the company started to really get focused and perform well, both the management team and i and the board felt like a transition at this moment in time would actually be more disruptive than helpful. that we had too much to do. the basic foundation of groupon is still being built. >> good thursday morning. we're live at post 9 at the new

york stock exchange with whey is turning out to be a pretty ugly midday reversal. the dow was up 86 points at the top of the session right after the bell. futures had looked good all morning long. lost it right in the course of say 30 minutes or so. dow is down 40 points. nasdaq barely hanging onto the flat line and the s&p the same thing at 1690. tesla's stock is rallying after the company delivered more vehicles than expected. on track to deliver 21,000 cars worldwide this year. over 5,000 model ss in the current quarter. and l brands rallying. retailer raised its guidance after same-store sales topped estimates. total july sales rose 4.4% to about $678 million. >> and now to our road map for this hour. middle america and consumer spending under significant pressure, so says citigroup in a new note this morning. we'll tell you why consumer spending is struggling and if the trend will last. shares of orbitz to a

six-year high. we'll ask the ceo what's working so well when we talk to him exclusively later this hour. plus, the business of bad is almost over. the final season of "breaking bad" starts this weekend on amc. we'll let you know what's next after "bad" comes to a close. and shares of groupon up over 25% and you will hear from the company's ceo later on. a recent report showing signs of cracks in the consumer, specifically middle america under pressure. this according to citi's u.s. retailing analyst saying trends have been soft and retailers are likely to provide cautious third quarter guidance when they report. let's bring in the chief u.s. economist and ethan harris. good morning. >> morning. >> morning. >> first of all, i think there is some confusion out there because you can look at a strong consumer credit report we just had, signs of demand in the

senior loan officer survey, and yet a lot of the retailers and some of the food names coming in shy. what's really going on here? >> well, i think what you're seeing is the mix of a bank telling its regulator what the regulator wants to hear. by the same token, a company telling you what's actually happening at the fundamental level with regard to the economy. what's happening basically is retail volumes are up about 2.5% year on year. you've got a 1% inflation rate. that means 1.5% growth. that's not a particularly robust retail environment. i think the consumer credit numbers tell you that as well. >> but, wait, are you saying that you don't believe the senior loan officer report, the fed's report? >> well, i think they're telling you what they're seeing, but i'm not sure whether it's giving you the real macroeconomic numbers you would traditionally be getting from these types of indicators, primarily because banks are under lots of pressure from the administration, and i think that's a very, very pivotal piece of the equation. and i think that's one of the

things you can't discount in terms of the survey. >> it goes beyond the survey, and to kelly's point about the household being in better shape, late mortgage payments, credit card delinquenciedelinquencies, go back 30 years to see numbers this low. is the consumer in good shape and if they're not, why do some of the numbers say so? >> well, i think consumers -- >> i think the consumer -- >> we're coming out of a very, you know, distressed period for consumers. i think things are improving. their balance sheet is better. their interest payments as a share of their income are lower. and the delinquencies and other problems have gotten a little less onerous. so things are better for the consumer. i don't think it's a great environment. i think we're kind of in a slow growth mode for consumers. >> ethan, where do we go from here? have people not been taking into account enough the pressure that especially the lower and middle income portion of the u.s. consumer is under? and if so, what does that mean

for the next 6 to 12 months? equities -- maybe taking the 40-point sell-off, putting that aside, the stock market is pointing to things looking up. >> yeah, and i think you have to look at two difference roles here. joe six-pack is not doing that great. you know, wage growth is very weak. we've had a subpar jobs recovery, and, you know, it's just a tough environment for joe six-pack. on the other hand, we've had a big stock market rally, housing market is improving. so for people who have wealth, upper income and upper middle income families, things are looking pretty good. so it really depends on which customer you're looking at. some of them are doing great and some not so great. >> steven, we had a big discussion this morning about to the degree they do have some income to spend, have they stopped shopping and are now putting it into their home? are they going the other way because target and some of the

down grades we're seeing, some of the guidance from some of the retailers, especially teen retailers, say not very good things about back to school. >> well, i think what you're seeing is the reality of the situation, that income growth isn't strong, so people have to pick and choose. and that shows you the fundamental weakness that's going on here. this goes, again, back to the consumer balance sheet adjustment. a lot of the consumer balance sheet adjustment that's taken place has some at the expense of banks forgiving debt rather than debt being repaid. that's the reason why when you look at the fha loan to value ratio, it's back up at precrisis highs because actually for the loans that are outstanding, a lot of them have been harped, and therefore the value of the loan is substantially higher relative to the value of the house, and that's not telling you banks are being very accommodative at all. it's just the way the harp process has worked. i think there's a lot of mixed signals, and that's why the economy is just stuck in this 1.5% to 2% growth trajectory, where it's going to be throughout most of 2014. >> that's for sure.

and i think a lot of it probably comes down to not using homes like at ms like we did in the past. thank you both for your thoughts on this topic this morning. >> one of the big movers today is groupon. the stock surging after the company's second quarter earnings beat estimates. in the last hour we talked directly to the new ceo eric lefko lefkowsky. >> it's so highly correlated mobile and it happens to be international in nature. we have over 11,000 employees operating in 48 countries, and we do about half our business outside of north america. as we start to turn around the markets, one of the great things about this particular quarter is we were able to break out the world in terms of three segments, north america, europe, and the retist of the world. not only did we make money in north america, we make money in europe as well. so people who are looking for that kind of global e-commerce

exposure might naturally think of groupon as a place to look. >> why have you been confirmed as ceo? did you push yourself forward with your 17% stake and just go, look, if a job is worth doing, it's worth doing yourself? >> not at all. ted and i jumped into this in february. we jumped in because they felt it was appropriate, and what ended up happening, we had every intention of running a search. the company started to really get focused and perform well, both the management team and i and the board felt like a transition at this moment in time would actually be more disruptive than helpful. we just had too much to do. the basic foundation of groupon is still being built. again, this is a company that hasn't even celebrated its fifth birthday, and when you're still building the model, having a founder, having somebody who is entrepreneurial can be an asset. >> isn't there a danger here though, and i understand that the market is really pleased with the way that you're

diversifying what you do and how you do it, but isn't there a danger here you become a jack of all trades? you know, you're heading right head on with amazon and walmart and even open table now in restaurant reservations. jack of all trades, master of which one? >> yeah. i think we're fundamentally a master i think of mobile and local commerce. we literally sit at the intersection of those two. when consumers want to buy something, the question is what do they want to buy? sometimes they want to buy food and drink or health and beauty, but they also want to buy hotels and products. if you look at what we're offering, it happens to be pretty correlated and centric around mobile and local. it's easy for people to think maybe they're abandoning their local roots or maybe they're not staying core to what they do. just as amazon went from books at one time to consumer electron i ic and eventually other categories, it's a natural

extension. our customers love this stuff and they buy it and they're engaged. that's what we're focused on. >> now, your guidance was on the light side of expectations, of analysts' expectations, why is that? >> our full year outlook was right on. the guidance we had set last quarter, and our ref nigh guidance was pretty much right on, maybe a few million dollars below but basically right on. we told people in the past and we're consistent with that message, we're investing in the long term. we're very focused on the long term. groupon should be one of the great e-commerce companies in the world. we're in the midst of building that business and trying to figure out how we migrate in being a daily e-mail company to a mobile marketplace. this quarter we're fortunate we're able to invest in marketing initiatives to drive customers into the funnel and drive people to this new experience. >> all right.

we also asked eric about groupon's co-founder, andrew mason's new album. he said from what he heard it reminded him, well, of the rainbow connection. >> a great song we should point out written i think by paul williams, but he also said andrew mason he has great respect for him. >> it was a tough question for him to take in the first place. >> yes. >> it was a huge quarter for fannie mae and freddie mac. now both posting big profits in the second quarter. now they're going straight to the u.s. treasury. president obama is calling for both lenders to be shut down. diana olick joins us now from washington to explain why. morning, diana. >> good morning. and, you know, profitability just has nothing to do with it in the eyes of the obama administration. both fannie and freddie reporting big earnings, profits, yet they're still held to blame for much of the housing crash. >> for too long these companies were allowed to make huge

profits buying mortgages knowing that if their bets went bad, taxpayers would be left holding the bag. it was heads we win, tails, you lose. and it was wrong. >> that was then and this is now. fannie mae reporting net income of $10.1 billion and paying the treasury $10.2 billion in dividends. that brings the total to $105 billion paid to uncle sam which bailed out fannie mae in 2009 buying $117 billion in senior preferred shares of stock. these dividend payments though do not go to pay back that bailout. treasury still owns that stock. and on the conference call this morning, fannie mae's ceo said that profitability should not slow the appropriate debate on the future of both fannie and freddie. just yesterday freddie reported a record $5 billion in net income. the push to reform the mortgage market is probably coming now because we are seeing a strong housing recovery and we're seeing home prices increase. we're also seeing investors come

back to the market largely in the jumbo arena, but we're told they're waiting on the sidelines to get back into the moshmortga market. >> thanks so much. shares of orbitz flying high. the stock rallies after second quarter revenue came in better than expected. we'll talk to the ceo in an exclusive interview. first, rick santelli, you're watching housing this morning as well. >> i'm telling you, don't you just love diana olick. that's the dynamic. i like what the president is saying but i also have a good memory. i think the gses were in the pocket to close to $200 billion but they paid back maybe $130 billion. i think there are other ways to get the gses out and the other one is a concept. at the bottom of the hour we'll showcase you, the viewer, as a concept for fixing the mortgage issues.

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welcome back. orbitz worldwide reporting higher than expected second quarter revenue today. the online travel agency citing an increase in hotel and vacation package bookings. simon hobbs is here talking to the ceo of orbitz in an exclusive interview. >> let's bring in barney hartford. welcome to the program. >> thank you. >> there was some confusion initially this morning because it looked like your earnings per share was basically zero because

you took an $18 million writedown on some refinancing. that clearly has given way if you look at the share price move to a gain of $250 million, $300 million on the value of your stock, barney. i guess that's the forward looking earnings segment. >> i think we feel really good about the results we delivered. we beet the top end on revenue and adjusted ebitda and raised guidance for the full year. probably the most important strategic metric is what we showed in terms of the continued acceleration in room rate growth. we accelerated to 20% in the critical hotel segment. >> because the legacy here is you're trying to move away from the focus on airlines and ticketing those into hotels and into mobile as well, barney. i know you will want to fly the flag on that. >> exactly. well, hotel and viecation packages is a critical segment.

it's increased the percent of our revenue from 44% to 48%. hotel is really growing strongly. as you said, mobile is another really important part of the story. it's a hugely dislocating part of the market right now. we're very well positioned. we have the best apps in the business. the only app to be featured in the apple itunes hall of fame, and we're seeing real trends. on orbitz.com, nearly 30% of our stand alone hotel bookings are coming through mobile. for same-day bookings, it's over 50%. >> we have this very aggressive market now between the three main competitors in the united states for the u.s. market, priceline with booking.com, exped expedia, and more recently trip advisor. how do you view that competition? >> it's always been a competitive market. i think the continued acceleration we've seen across all of our brands sha, i think

feel really good about it. in the asia-pacific region in particular in international, we've increased the number of currencies we're able to offer hotel bookings into 35. we've added 16 new currencies, including china, russia, and brazil. the market opportunity internationally is huge, but even in the u.s. the business is growing very strongly. >> at the heart of it though, you're a technology company you would say. you use your algorithms to get people the best ideas on what they should book. the industry has changed over the last year. consumers will notice you get a ranking from all the available options on one page. no pop-ups anymore. they call it metasearch, and all the big companies have gone towards that. where do you stack up in that? because you are next to priceline at a $46 billion market cap, you are quite a small player, barely $1 billion. do you as a technology company look to get taken over like

kayak was taken over? is that the end game? >> i think we feel really good about our standalone growth prospects. the significant majority of the market today is online travel agencies. the metasearch trend, there's been some speculative investments from priceline and expedia, but we think the best value for consumers comes when they come to our site directly because of the extensive range of member special, deals, mobile only rates, and growingly the loyalty offering we're able to offer customers when they come to orbitz. we feel good about, one, the growth, but, two, also the trend in terms of detective visita of. we expect to be rolling a loyalty program out to all customers by the end of the year. >> i want to just point out that the last time you were on this show, which was 15 months ago, and we should have you on this show more often, your stock was

at $4.20. it's now trading at $12.21. rather than doing a huge victory lap on that, where do you think the stock will go from here? >> you know, i try to keep my focus on execution and working with -- >> come on, barney. that's a huge move. come on, you can't get a pass with that. where do you think the stock will go from here? are you scared at these levels? >> i focus my efforts on running the company and we've got a very smart group of investors who will work out what the company is worth, and i've been true to that. >> okay. we'll leave it there. nice to see you, barney. congratulations on the share price movement. into the 21st century, the newly named 21st century fox kicking off its first investor day. we'll tell you what to expect from the new company when we come back. ♪

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julia boorstin has the late nest los angeles. >> fox's chairman and ceo rupert murdoch kicked off six hours of presentation from senior management. he started off talking about the value of the company's original content saying that he expects growth outside of the u.s. to exceed that in the u.s. and that fox is uniquely positioned in international markets. he also talked about the company's potential to take advantage of big trends here. murdoch saying that he sees massive opportunity in the fact that free enterprise is growing the middle class. he also talked about technological innovations and the growth of mobile and how this is enabling a whole new generation of consumers to get

more of fox's content all the time. now, right now chief operating officer chase carey is addressing investors about the company's three pillars, content, scale, and global leadership. we'll hear from the heads of the company's various divisions. analysts say they're hoping to hear about the company's capital allocation plans, also about earnings growth projections for the next two years in particular. now, the launch of fox sports 1 coming up on august 17th is sure to be in the spotlight. just yesterday fox sports inked a 12-year deal to carry the u.s. open golf tournament reportedly paying at least double the $37 million in fees previously paid by nbc and espn. and while fox has certainly benefitted from growing retransmission fees with the cbs/time warner cable battle still in the works, the company is sure to case feface question

whether fox has similar blackouts coming up. i'll be back with more through the day. >> an interesting story. julia, thanks very much. president obama is calling for replacing fannie and fraeddy with a new system that would put the private sector, not the government, at risk for home loans. but will his plan really work? plus the bells are about to sound across europe. we'll get you details on the close with simon hobbs when we come back. before global opportunities were part of their investment strategy... before they funded scholarships to the schools that gave them scholarships... before they planned for their parents' future needs and their son's future... they chose a partner to help manage their wealth, one whose insights, solutions and approach have been relied on for over 200 years. that's the value of trusted connections. that's u.s. trust.

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the european markets are closing now. >> a lot of green on that map today, simon. >> there is a lot of green on the map today in contrast to what's happening in the united states. still a lot of skepticism about the bank of england's targeting of interest rates on unemployment. german data a little soft today as well. it's kind of -- you can see some sectors moving. the insurers, banks are higher. some of the miners have also made gains today. rio came out with figures and an announcement on aluminum. rick santelli rightly was highlighting that europe is still tough, and that's showing up still in the earnings reports quite clearly. adidas on the sports wear, nestle, their sales are really challenged by what's happening in europe at the moment.

deutsche tell -- telecom reported they're actually sacrificing around 600 million euros of free cash flow each year to push the u.s. subsidiary, but you can see the stock is doing really well and investors like what they see. one more before i set you free, back to the main program, we will watch the white house to y today. the greek prime minister is going to meet with president obama. it's important positioning potentially for obama to stand with samaras potentially against austerity in the face of angela merkel is how some people are painting it. remember, according to the imf, the greeks still need more money, and after we get through the german election on september the 22nd, we will see how that plays out. >> kind of forgot, we've got an election to deal with over there. >> she's going to win though, hands down. >> she's going on vacation. >> she's going on holiday, i love that. >> don't worry, i got it.

thanks, simon. >> what a crazy day in gold and nat gas. let's get to sharon epperson. >> and oil, too, carl, because you would think china as the world's largest oil consumer would actually have seen perhaps a rally in oil prices based on the import data we got. we're looking at imposhtrts at record pace in july. we're looking at lower oil prices and lower petroleum prices and a lot of that has to do with what we're seeing in terms of supply in the north sea coming back online and what demand is going to be here and elsewhere. natural gas has been extremely volatile this morning. in the last hour we've seen natural gas which had plummeted 10 cents after the report recover and now basically back where we started. what happened? we did see many traders looking deeper into the eia data to find out with an adjustment it was more like an increase of 82 billion cubic feet in the last week, not 96. it's still a bearish number but not as much of a shock and prices have recovered from that

initial low. metals prices definitely reacting to the china data, and we're looking at platinum actually leading the way there. platinum is leading the gains in the base metals. back to you. >> all right, sharon. thanks very much. let's bring in bob pisani with a look at what's happening at the nyse. >> not helpful is what's going on here. the problem is the technicians will start squawking because we're having -- i'll show you the chart. we gapped up. we've had three down days and then you gap up and that's a really good sign technically and then you fade away, that's not a good sign technically. here are the two days on the s&p. we just gapped right up here after three down days and then we just kind of fell apart. not what you particularly want to see in these kinds of situations. the technicians start squawking and then everybody, it's all like a bunch of chickens in a coop and you don't want to hear that if you're on the bullish side. let's just move on. china had good news, thank you very much, exports were

terrific. you could see the effect all over the world of those data set. sharon mentioned the metals. copper, aluminum, zinc, nickel, this has all been a terrible complex for months on end. all of them nice moves to the upside. commodity producing countries are also having a nice lift as a result of the export and import data in china. these are exchange traded funds. you can buy brazil, australia, south africa, and peru in single individual etfs. we have been talking about this for years. look at this, 2.5% gains in those countries as well. and your everyday commodity stocks, all of them are to the upside here in the united states. 4%, 5%, 6%, 7% gains. the usual suspects that we see. let's move on. i think you get the point about the commodity rally we have going on here. we have had some problems with the big banks. jpmorgan facing criminal probe over mortgage bonds. most of the banks have been weak throughout the day. i don't think it's particularly large numbers here. jpmorgan is the biggest one that's down here.

retail not very good today. i got a lot of questions out of elizabeth arden. they've been trying to reposition the brand for a while now. this is near a two-year low. this is one of the biggest decliners on the nasdaq. put it simply, let me put up lizarden. the bottom line is they came up and said the miss was do to weakness in one ever our largest north american retail customers. they didn't say it but i think it's walmart. one of the most fascinating iowas i haiow ipos i have seen. it's $20.66. we are talking about $12 to $16. it's opening around $19. this is synthetic biology, artificial life forms. >> scary. >> 20th century was the golden age of physics. this is the golden age of biology. we should do a special on this. congratulations on that fabulous special last night. >> thank you. >> i watched every minute of it. >> that's nice of you. how many ipos on the street tomorrow?

>> i think there are seven, including the ones on the nasdaq, but this is the middle of august. it's normally deadsville in ipos. >> thanks, bob. meantime, the president wants to replace fannie and freddie with a system that would put the private sector, not the government, primarily at risk for loans. we want tok to rick santelli in chicago with more on that. >> i love it. let's all say it 50 times. a mortgage market without the government, yea, yippee. i think you know a little bit about the mortgage market. maybe you could give us a quick run through on a simple version of what went wrong in '08. >> i don't know if you heard gene sperling on maria bart roma the other day, he pointed out mortgages have interest rates and credit rates. here is an example of deadman's

curve. investors buy assets thinking there are no credit risk but actually there's a lot of credit risk. >> so now this blue line wiould be if someone could remove the risks, it should be more like blue line. >> that's what happened. >> remember that old day "king for a day," i'm making you king for a day, if you could fix the mortgage market given your experience, what concepts would you put forth and i'm going to give you a hint, he's already thought about this a bit and he has a concept product. take it away. >> the first thing you have to do, you have to get rid of what the economists call moral hazard. you have to get the taxpayer out of the question. as long as the taxpayer is there, the tax pay ser going to wind up losing everything. so i believe in using the chicago future style model. i have a transparent mark to market system. >> let me stop you right there. if i understand what you're saying, you're saying that to begin a discourse on how to solve this without a government

presence, the exchange model is the way to go. expand on that a little bit. >> there have been no defaults on exchanges going back over 150, 200 years. there's transparency, no counter party credit rick. not going to have any problems like you had in 2008. there's daily pricing. there's daily variation margin on this concept. >> so your group has worked on a concept and should an exchange be interested, any exchanges interested in this product? >> alas i'm not allowed to divulge that. >> give me more nitty-gritty. >> i have to keep going back to gene sperling. there are two types of investors, those who want the return ever their principal back and investors who want credit risk. they'll risk losing their principal but they want yield on it. you have to create a product that appeals to these two investor groups. these are gigantic groups. >> how is this concept, if it turns into a product, how will it get fannie and freddie out of there? what do they do now that this is

going to take away? >> believe it or not, fannie and freddie are supposed to create products that appeal to these two markets but they fail miserably. after 2008 people realized the products they thought had no credit risk have credit risk. these investors just shunned that market. they stay away from it like it's the plague. fannie and freddie, believe it or not, have never even appealed to the credit risk investors. they just went to the taxpayer. until about two weeks ago, they never targeted instruments towards these investors. our concept splits the mortgage so the interest rate investors get what they want and the credit risk investors get what they want. >> you can obviously see as we go from this concept discussion and the discourse that you don't need the government to solve this problem, we're going to move this conversation to cnbc.com. so all you have to do in the search bar is type santelli exchange extra and follow us there right now. it's going to go from concept to

us describing it more in a product-type environment. >> love it. thanks very much. now people know how they can follow along. forget buy american. a new study says buying import products is good for the economy. courtney reagan joins us with more on that. >> the united states of imports. the catch? the big business of seafood. the story when "squawk on the street" returns. to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪ this is the pursuit of perfection. [ male announcer ] i've seen incredible things.

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buy imports because it's actually good for the u.s. economy. courtney reagan joins us for our series "made in america." >> good morning. a little economics lesson for us. new research shows consumers should be buying imports because without them a lot of american businesses and the american workforce could be caught like fish out of water. >> reporter: stavis seafoods ships more than 36 million pounds of seafood every year and most of this is sourced overseas. >> in 1985%, 80% of what we did was domestic fish and 20% was imported. at this point it's flipped. >> reporter: 84-year-old stavis seafood has gorown to 126 employees. consumers want their fish year

around and that supply isn't available 365 days domestically. laura, who does research for the u.s. retail federation, is fighting what she calls an outdated perception that exports are good and imports are bad. >> more imports equals more jobs, more growth, more connection with a global economy in the 21st century. >> reporter: she says 16 million american jobs exist solely because of imports and that more than half the firms involved in importing are small american businesses, like stavi s seafoods. >> you have shrimp out of indonesia and india. on the other side over there, you have tilapia coming out of china. we also have some domestic shrimp over here. >> reporter: this freezer holds over 1 million pounds of fish. 200 different species from 35 separate countries. without imports, this business would look a lot different. >> the whole industry would be

smaller. there would be some pretty negative impact. >> and the employment numbers in the industry would be smaller, too. thanks to the import supply keeping up with consumer demand, the industry has kept many jobs where some might have been lost. kelly? >> wow. courtney reagan with the latest on that one. thanks very much. makes you think again about whether it's all a good thing to buy american. all bad things must come to an end. the final season of "breaking bad" kicks off this weekend on amc. we'll tell what you the channel can do for an encore when we come back. stay with us. ♪ [ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪

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you'd know that music anyway. shares of amc networks beat expectations helped by shows like walking dead. future of am c is relatively uncertain. richard, welcome. good to have you. >> how are you? >> good. well not as good as this stock chart has been. >> it's been a good one. >> people have gravitated to amc for one program or another. too rich for your blood? >> so we downgraded it yesterday. we have a buy rating. it was only 11% upside to our target. we generally don't like companies outstripping our

target and maintain buy ratings and in the absence of, you know, a real tangible catalyst, we thought maybe we could buy it at a better price down the road. >> you say the content market is getting a little frothy. by what standard? historical standards versus their overall viewership? >> a couple different standards. there's something we call binge fatigue, right? you get a show like "the killings," hasn't perform as well as it did last year. we think people are bingeing. we had "house of cards," amc, they got a lot of emmys this year. however, unlike years past, you had about a dozen shows vying for those awards, all right? and shows like "bate s motel." really a lot of great content. now, that great content is also very expensive, right? netflix is paying $40 million, $50 million for "house of

cards." so the ability to bring that content on your network like amc is going to cost you a lot more this year than it did three years ago. i think the first rendition of "mad men" cost about $13 million. >> that's not bad. >> this year they're paying $25 million. >> for the season. >> for the season. and new shows coming on, you know, if they don't go to netflix or some other service, you know, maybe they cost $40 million, $50 million. >> are you saying cable going the way of hollywood where we see the re lieia ireliance on t poles and the necessity of delivering all the time? >> yes, and one has to do with all the others. as the big producers, directors, writers are leaving the movie business because their gross margin on a film has contracted from 10% to 0%, they're trying to find a spot on tv, and they're doing the same thing to

tv. >> what happens now? do you then walk away from the sector and is there opportunity elsewhere as a result? >> well, so what happens now? so we think content is king, right? but distribution is the landlord. and to be king of an empty empire is a little tough. so we're following cbs/time warner very closely because really what that argument is about is a way forward of the economics of the industry. time warner is saying, hey, we're not going to pay $200 million to you, cbs. we're going to give the best content to streaming for $113 million. >> where is amc in terms of their time line on fees? when would they be up for renewal and would they be in a position to make as strong a stand as cbs appears to have? >> they're getting into a stronger and stronger position. the reason why, we were negative about their position last year. we're more positive about their position because they're entering more day parts. they're in saturday with "hell

on wheels." they're putting more content over more networks, right, so in the future you're going to see sunday and ifc and we have originals, too. and so the point, the content market is frothy, but josh is a really good executer of content, he believes in stories. the networks have their own unique narrative, the anti-hier and that sells and they may achieve a degree of success while others will bring content to the market and pull it back. we think there may be more sustainable in regards to replacing "breaking bad." they have "the turn," the di

dividi divide. >> a good slate. >> we think they will have a good success rate. it may not be 80%, maybe 60%, 70%, but that may be all they y need. >> richard, it's fun to watch, literally. >> thank you for coming in. >> when we come back, find out what the t-mobile president had to say about their second quarter. we'll be right back. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. f-f-f-f-f-f-f. lac-lac-lac.

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let's get to scott wapner with some breaking news at hq. scott? >> thanks so much. some big news involving jcpenney. i have a letter in my hand here that bill ackman has sent to the board of jcpenney. here are the items. jcpenney has initiated a search for a new ceo to replace interim ceo mike ullman. it's clear from this letter that bill ackman is frustrated that that search process has not gone fast enough. it was supposed to start, according to the letter, back in april, but it was only at the july 22nd board meeting, nearly four months after that, that the board finally agreed to make the succession issue part of the agenda. mr. ackman thinking according to the letter that a new ceo should

be in place between 30 to 45 days, and clearly he's frustrated thinking that this entire process is going too slow. the other significant development here is that bill ackman says in this letter that he has gotten allen questrom to agree to come back as chairman of the board. he's the past ceo of jcpenney. he's considered to be a retailing legend. he has led several of nation's largest retailers. mr. ackman saying in this letter that questrom has agreed to come back so long as he agrees with the choice of who the new ceo candidate will be. obviously there are some candidates in mind. mr. ackman saying in this letter there is no reason that this process could not be completed in the time frame that allen recommends. again, they wanted it to start in april. it's only until the july 22nd board meeting that the board finally got on board with the

process. as we all know what this stock has done of late, falling to 12 1/2 year lows, says simply, we cannot afford to wait. so jcpenney is looking for a new ceo to replace interim ceo mike ullman and allen questrom looks like he will be coming back as chairman of the board so long as they can agree on who the next ceo will be. we'll watch this stock for the rest of the day. >> you have to get across the room to get in place for "the half," so thank you for that. obviously, fair to say a stunner. a couple thoughts. one is people argued -- some argued that ron johnson was not given enough time, kel, with 11 months in his tenure. to take mike ullman out after less than that seems odd to say the least. the other is allen questrom, we're just going back into previous epochs of this company. some people will find that somewhat peculiar. >> yet shares spiking almost 5% on that report.

you have to wonder, are investors just to desperate for change. but, carl, as you have said, this has been perhaps as much of a distraction as anything. >> yeah. obviously there have been a lot of questions about ullman's tenure so far even though it hasn't been that long. for instance, returning to couponing, returning to sales. why has that not resulted in the immediate turns in comps which are getting easier over time? but obviously ackman is very impatient. he has a lot of fires burning right now and probably feels that perhaps, i'm guessing, this is his low hanging fruit. >> we know a 13-year low. the fact that as poorly as the company was doing when they decided to bring ron johnson in, unfortunately all that's happened is jcpenney has not managed to increase their share of the u.s. consumer wallet which we've been talking about all morning how much pressure consumers are under. you have to differentiate yourself and get people in the door. >> we've been tal